Championing Entrepreneurs in the new Nepal

Posted on October 28, 2016

‘The government has not internalised the fact that governments cannot solve all problems. We have not seen it trying to tap into local knowledge and energies of volunteers, the private sector, and civil society actors in the rebuilding process, who were actually the first to respond right after the earthquake.’

Freedom’s Champion: How is Nepal’s post-earthquake rebuilding coming along? Are there more or fewer opportunities for entrepreneurs these days?

Akash Shrestha: Many people have slowly pulled their lives together and are getting back to normalcy, but Nepal has not had local elections in almost two decades. Many people, especially the young generation, have never known what it means to have elected local representatives. The government has not internalised the fact that governments cannot solve all problems. We have not seen it trying to tap into local knowledge and energies of volunteers, the private sector, and civil society actors in the rebuilding process, who were actually the first to respond right after the earthquake. The government’s solutions have not worked efficiently at all. The interest subsidies and cheap credit program introduced by the government for earthquake victims have seen no real takers in the market, which reflects a lack of financial pragmatism on the side of the government and financial prudence on the side of the people.

With a historic budget of US$10 billion in a US$20 billion economy, with a huge portion allocated to rebuilding efforts, the government is crowding out private investments — and opportunities for entrepreneurs are decreasing. Huge government spending could trigger demand-pull inflation and increase the cost of living and cost of doing business for entrepreneurs. This is coming at a time when the government has also been restricting private investments, one sector at a time, through legal restrictions. This is not an ideal time to be in Nepal, as an entrepreneur or as an investor.

With Nepal’s new constitution, what are some challenges and opportunities for entrepreneurs?

One of my research projects is called “Facilitating Enterprise in Federal Nepal” (FEFeN). With the promulgation of the new constitution in September 2015, Nepal is now a Federal Democratic Republic. The powers and functions of the central government will have to be devolved across all new provinces.

So what’s the idea behind the new project?

As the new policies and institutions are devised to govern Federal Nepal, FEFeN provides recommendations for effective, economically sound, and efficient institutional structures for easy entry to and exit from the market. So we’re beginning to talk to various entrepreneurs — small to big — spread across all of Nepal, to learn from them the challenges to market entry and exit that they face under the unitary and centralised system of governance. We also get their perspectives on what the structures and powers of provincial and local authorities should look like so that these and other aspiring entrepreneurs will feel that this federalism is actually for them, and that it will create a conducive and enabling environment for all to earn their own livings. And what are you learning from the entrepreneurs you talk to? We have already travelled to 10 districts across Nepal and interacted with many local entrepreneurs. We are also engaging with regulators, to learn about how they are approaching this aspect of federalism. I was in Birgunj — a metropolitan municipality that borders India approximately 85 miles south of Kathmandu — in May to meet entrepreneurs and local-level government agencies to learn the functions of local regulatory agencies. I wanted to test which government services were available to the people. Unfortunately, I saw that government promises and practices do not often resonate.

Lorik Prasad Yadav, a resident of Sugauli Birta, a small village within Birgunj, purchased a tractor with an initial investment of 1 million Nepalese Rupees (NPR), or approximately US$9,300. He used it as a mobile mill for cereals like wheat and paddy. This was a huge service to the locals, and made lives easier for everyone. Women did not have to travel for hours to stationary mills anymore; Lorik would come right to their doors. These women could now invest time into other activities. His service was cheaper, too — only 1.5 NPR, or approximately 1.5 US cents per kilogram, while the other stationary mills charged 2.5 NPR. People were able to save. He’d even leave the chaff behind, so the local farmers could use it further.

But it seems as if innovation always threatens the status quo. The people running stationary mills faced massive competition there. They had to upgrade their business and make lives easier for their customers, or they’d have to shut down. Of course, instead they filed a complaint against Lorik at the Office of Cottage and Small Industries (OCSI). And the same government that has committed to modernisation of agriculture came to their rescue and closed down Lorik’s business. Right across the border, in India, there are others like Lorik who are freely operating the same business. I went to the OCSI and asked them why they’d closed his business down. The answer was quite a shocker: there is no such provision in the law. The office chief acknowledged that he did not want to shut it down, but had no authority to challenge the policy.

Lorik hopes that as Nepal implements federalism his local government will have the power to frame its own laws that enable local entrepreneurs like him to earn a decent living by catering to the needs of the market, no matter how big or small the business.

What’s a typical day like for you at Samriddhi Foundation?

We have a flexible approach here. Everyone is free to pace their day in their own preferred way. We operate on an informal horizontal network — nobody tells anyone else what to do. But with freedom comes responsibility. Everyone takes accountability, figures out where they fit into the entire project, and delivers. We encourage innovation, new ways of doing things, and dealing with problems head-on. Everyone’s opinion matters.

How has Atlas Leadership Academy (ALA) helped you in your role?

I started working at Samriddhi on April 10, 2013, and all the new strategic frameworks and skills I’ve acquired since then through ALA have helped me grow within Samriddhi. They’ve helped me design and implement new projects, supported our donor cultivation program, and helped me more purposefully engage in networking with key stakeholders.

Akash Shrestha, research coordinator with Kathmandu-based Samriddhi Foundation, is somewhat obsessed with ensuring that entrepreneurs can earn their own living in the new Nepal.